Built and fact-checked by the DocNectar team — see our editorial standards
Key Features
Instant Calculation
Get accurate results in real time with our optimized algorithm.
Mobile Friendly
Fully responsive design. Works on all devices & screen sizes.
Privacy Focused
Your data stays on your device. We don't store any inputs.
100% Free
No hidden costs. This tool is completely free forever.
Free Cash Flow to Equity (FCFE) is the cash a company generates that's specifically available to its equity holders, after accounting for debt-related cash flows. It's the natural cash-flow basis for valuing equity directly, rather than the whole firm.
How it works
Enter net income, depreciation & amortization (added back as a non-cash expense), capital expenditures, the change in working capital, and net borrowing (new debt issued minus debt repaid). The calculator applies FCFE = Net Income + D&A − Capex − ΔWorking Capital + Net Borrowing.
- Enter net income.
- Enter depreciation & amortization.
- Enter capital expenditures.
- Enter change in working capital.
- Enter net borrowing.
- Click Calculate to see your results.
Examples
A company funding growth partly with new debt
With $100,000 net income, $20,000 of D&A, $30,000 of capex, a $5,000 increase in working capital, and $15,000 of net new borrowing, FCFE works out to exactly $100,000.
Who should use it
- Equity-value DCF valuation.
- Estimating cash available for dividends or buybacks.
Industry applications
- Corporate finance and valuation
- Equity research and investment analysis
Advantages
- Directly measures cash available to equity holders, useful for equity-specific valuation.
- Accounts for the real effect of a company's financing decisions (borrowing/repayment).
Limitations
- More sensitive to financing decisions (debt issuance/repayment) than FCFF, which can make it more volatile period to period.
Common mistakes to avoid
- Getting the sign of the working-capital change or net borrowing backwards.
- Discounting FCFE at WACC instead of cost of equity — that would double-count the effect of debt financing.
Best practices
- Double-check the sign convention on working-capital change and net borrowing before submitting.
- Use FCFE with cost of equity as the discount rate, and FCFF with WACC — don't mix the two.
Tips
- If a company has minimal debt and stable working capital, FCFE and FCFF will be fairly close — the gap widens the more a company relies on debt financing.